Latest market data

Stock search

What could pediatrician appointments possibly have to do with Joe
Merrick's business as an online precious metals dealer? When it
comes to health insurance, the answer is everything. The 13
full-time employees of Merrick's Dallas-based Provident Metals
have 30 children, all under the age of 15, with four babies born
in 2011 alone. That means potentially high medical bills for
everything from childbirth to vaccinations, which Merrick had to
factor into his health-insurance decisions.

Like many small-business owners, Merrick, 34, had no experience
with group coverage. "We had no idea how to even start looking
for health insurance," says Merrick. But with some outside help
he gradually learned how to navigate the health insurance system
– and you can, too.

Here are six common mistakes to avoid when choosing your
company's health-care coverage:

1. Don't go it alone. Whether it's insurance
brokers or your state insurance department, reach out to experts
for help. When Merrick began looking into his options, he didn't
realize he could use a broker until he stumbled on an ad for
eHealthInsurance.com, an online health-insurance brokerage. The
broker presented 20 options and helped narrow his selection based
on the demographics and needs of his employees. "It's a lot less
daunting with someone in your corner," Merrick says.

Your state insurance department is also a good resource,
providing details about such possible small-business benefits as
health-insurance tax credits and joint purchasing arrangements
with other companies that can reduce costs.

2. Don't assume one size fits all. When Merrick
was settling on an insurance plan, he quickly realized a generic
package wouldn't work for his employees who range in age from
their early 20s to late 50s. To accommodate such a broad age
span, Anthony Lopez, a small-business specialist at Mountain
View, Calif.-based eHealthInsurance Services Inc., recommends
providing employees with two or three plan options.

After consulting with his broker, Merrick decided to offer a
health savings account that sets aside a percentage of tax-free
employee wages toward healthcare and two group plans, including a
less comprehensive one with a higher deductible and lower premium
costs. "We have some single guys here and their premium is much
lower," Merrick says. His company pays 80 percent of premium
costs up to $650 a month.

3. Don't overlook employee opinions. Remember to
include employees in discussions about insurance coverage both to
understand their needs and to encourage them to take
responsibility for their health-care spending, says Devon
Herrick, health economist at the National Center for Policy
Analysis, a Dallas-based public policy research organization.

"Educate them that this is not just free money. It's part of
[their] pay." It also helps to talk with workers about adopting
healthier habits and making smart choices, such as using generic
rather than brand name drugs.

4. Don't scrimp on benefits. It's tempting to
save money by forgoing benefits like dental and vision, but such
extra coverage can be valuable in competing for talent. While
dental care and chiropractic services aren't part of his
company's health plan, Merrick reimburses each employee $200 a
year per family member for dental care and covers the cost of a
first-time chiropractic appointment and half the cost of
subsequent visits.

"We need to have things those big companies have," says Merrick,
who also offers gym membership reimbursement. "We are competing
against them as much as we are with smaller companies."

5. Don't limit yourself to traditional plans.
Sometimes a standard group insurance plan isn't the right--or
only--choice. When Merrick realized a group dental plan would be
far too costly, he asked local dentists if they would offer
discounts to employees who pay with cash or checks. Merrick
succeeded in negotiating discounts of as much as 40 percent for
basic services like cleanings and X-rays at two dental offices,
and he worked out a similar deal with a local chiropractor.

In some cases, offering a group plan isn't even an option. Mary
Harrell-Paul, 51, founder of Crown Chauffeured Transportation, a
Des Plaines, Ill.-based car service, wanted to provide health
insurance, but not enough employees were interested to meet the
minimum participation rate required for a group plan. Paul took
an alternative approach, allowing the two employees in her
12-person company who want coverage to purchase their own
insurance and reimbursing 90 percent of the cost.

6. Don't neglect to reevaluate the
coverage. With medical costs continuing to rise and
the fate of the health-care reform law still uncertain, policies
and plans will be changing rapidly. It's critical to stay on top
of the latest developments, says Sandy Praeger, chairwoman of the
Health Insurance and Managed Care Committee of the National
Association of Insurance Commissioners. She also advises
companies to track changes in the composition of their workforce
that might warrant adjustments to insurance plans.

At least twice a year, Merrick asks his insurance broker to
reevaluate his coverage and costs. As a result, he has changed
insurance companies twice in four years to save money. "If you
are not rerating yourself at least twice a year," he says, "you
are really doing a disservice to your company."